The Change Of Political Risk Of China 's Overseas Direct Investment And Its Countermeasures

Since the2008financial crisis, the world economic has been in the doldrums, but China’s economy has been rapid development. China already has double identity of capital importer and capital exporter. However, accompany with the expansion of outward foreign direct investment, China’s investors encounter more and more political risks in the host country. Along with the changes of the world situation, the political risks are changing. Because the distribution characteristics of China’s outward foreign direct investment as well as the different national conditions and policies between developed countries and developing countries, China’s outward foreign direct investors meet with disparate political risks in developed countries and developing countries. Our country and investors suffered considerable economic loss. In this situation, it is an urgent task to improve the mitigation measures for the Chinese government and investors in order to protect the interests of China’s outward foreign direct investors.This paper introduces the current situation of China’s outward foreign investment and the types of traditional political risks. The paper focus on the changes of political risks from developed countries and developing countries after joining the World Trade Organization in2001, especially after the financial crises in2008. We should improve the political risks mitigation measures by government and investors, because our existing protective system is insufficient.The paper is divided into three parts:the preface, text and conclusion. The text is divided into three chapters as the following:The first chapter is the summarization of political risk. This chapter mainly introduces the concept of outward foreign direct investment and political risks, discuss the current situation of the development of the China’s outward foreign direct investment and the types of political risks.The second chapter is the changing of political risks that China’s outward foreign direct investment facing. The reasons that China’s outward foreign direct investment facing different political risks from developed countries and developing countries is discussed first. Then the manifestations of political risk are introduced. China’s outward foreign direct investors are mainly facing national security review, antitrust system and indirect expropriation in developed countries. Asia’s turbulent political scene, anti-Chinese hostile feeling and terrorist act, Latin America’s indirect expropriation, war turmoil, environment issue, trade union and social problems, Africa’s armed conflicts, government corruption as well as superpower games are China’s outward foreign direct investors facing in developing countries.The third chapter introduces China’s mitigation measures. The government should perfect the insurance system, make the best of our bilateral agreements as well as use the diplomacy tools to protect the outward foreign investors’ interests. The investors should make measures to protect themselves’ interests, too. Risk assessment must be done well before investment, then insuring the political risk, actively using the domestic law and international law to protect themselves also necessary.